Obama’s Coming Tax Hikes Will Cripple the Economy

You keep vomiting up the same nonsense. Show a link!! The CRA, which is what you're too stupid to realize that you're actually referring to, had NOTHING to do with the subprime meltdown. Moderate and low income people got CRA loans but so long as they were conforming loans, which were the only ones made by banks operating under CRA rules, these people didn't default. It was the 3.5 million subprime loans that had nothing to do with the CRA lending regulations that had a high default rate.

More than half the subprime loans made were by private mortgage lenders that were not regulated by the FDIC and had no CRA lending obligations. They made subprime loans to for profit knowing they were going to package and sell every bad loan on the secondary mortgage market. The Federal Reserve and John C. Dugan, Bush's Comptroller of the Currency, already made this clear. From the Dallas Fed report;

"The subprime market took off in the late 1990s. By 2006, the market had surpassed $600 billion and accounted for one-fifth of mortgage originations. Independent mortgage companies made 46 percent of these loans; banks and thrifts made 29 percent. Affiliates and subsidiaries of banks and thrifts made the remaining 25 percent. While subprime lending existed before the 1990s, the flagrant and widespread abuses in this market did not occur until the late 1990s. The originate-to-distribute model presented the opportunity for independent lending institutions and mortgage brokers to make substantial profits. In this model, originators sell, or “distribute,” loans to the secondary market and have less incentive to scrutinize the riskiness of these loans than if they keep them. Their income and fees are based on volume of loans sold, so their focus is on quantity. Before the subprime market fell, securities backed by these loans yielded high returns and were thus appealing to many investors...There appears to be a direct correlation between the quality of subprime loans and the degree of regulatory oversight. Nondepository mortgage providers such as mortgage lenders and brokers are regulated by 50 different state banking supervisors instead of a federal body responsible for comprehensive oversight. Comptroller of the Currency John Dugan reported that these companies “originated the overwhelming preponderance of toxic subprime mortgages” and these loans “account for a disproportionate percentage of defaults and foreclosures nationwide..."

Dugan also made clear that, "Only 6 percent of higher-priced loan originations made by banking institutions and their affiliates in 2005 and 2006 went to lower-income borrowers or borrowers in lower-income neighborhoods within CRA assessment areas..."

http://www.dallasfed.org/ca/bcp/2009/bcp0901.cfm

Elsewhere in this same report, Dugan stated that more than half of all subprime loans were made to middle and upper income mortgage borrowers who did not live in CRA areas and did not take out loans under the CRA program.

steve of IL 11:35AM August 16, 2010